As in many cities, the drivers of New York City's 13,000 medallion taxis face a boom-and-bust cycle every day. The rush hour periods are the exception. During the majority of the day, there is intense competition for passengers and many drivers simply stop trying. Persistence during the non-peak hours is critical for earning a living wage, as a large fraction of rides occur during non-peak hours yet demand decreases considerably during those times. Many drivers state that it is both highly important to find passengers quickly during these slow periods, yet it is also highly difficult.
Drivers go to great lengths to form accurate expectations about where their time will be best spent looking for passengers. However, drivers have incomplete knowledge about where taxis are most likely to be needed. In addition to requiring taxi drivers to work harder, this incomplete information produces other negative effects. Taxi drivers must search longer per fare, which produces more traffic on congested streets as well as more noise and atmospheric pollution. Drivers who exert greater effort per fare are more likely to suffer from fatigue and to compete more aggressively for passengers, making the roads more dangerous. Finally, inefficient taxi allocation limits passengers' access to taxis.